2. Decide what physical servers you will update. You might want to update only a few servers at first and test using them in production, and update the rest after testing is successful.
3. (Necessary only if you don't have profile with the same settings) Create a new physical server profile, as described at http://hsphere.parallels.com/docs/3.4.1/admin/html/pserver_profiles.html
When creating the profile:

At the E.Manager -> Update -> Update Boxes screen, for each updated server, click the server name and read the updater log. Verify that the new versions of the following packages were installed:

Package

Linux Version

FreeBSD Version

hsphere-apache-h3.1

1.3.42-3

1.3.42_3

hsphere-apache2-h3.1

2.2.22-2

2.2.22_2

hsphere-mail-service

5-19

5_19

hsphere-bind

9.6-5

9.6_5

hsphere-ftp

1.3.3-9

1.3.3_9

hsphere-rsync

3.0.8-1

3.0.8_1

hsphere-phpMyAdmin

2.11.11.3-1

2.11.11.3_1

hsphere-config-mysql

1.1-10

1.1_10

Check the overall update status at the end of the log.

(optional) Additionally, you may log in to the updated servers over SSH and issue the following command:
On Linux servers: # rpm -qa | grep <package-name>
On FreeBSD servers: # pkg_info | grep <package-name>
The output should contain the new versions only.